As recently as March 2020, few Australians would have heard of the Burnet Institute. In little more than a year, however, it has become a key influencer of Australian governments, especially in its home state of Victoria.
Burnet produced the modelling that was used to justify Victoria’s lengthy — and ultimately successful — second-wave lockdown in 2020 and, more recently, the modelling that underpinned Premier Daniel Andrews’ very cautious 2021 reopening. But its government influence is not all that has expanded this year: Burnet recently disclosed that its annual surplus (essentially its annual profit) skyrocketed to more than $60 million.
But it gets far better. Burnet also recently announced a $200 million financial windfall, unprecedented for the not-for-profit sector. While riches were raining down upon the previously anonymous institute, buried deep in its 2020 annual report was a startling revelation: Burnet claimed almost $5 million in JobKeeper allowances in the 2021 financial year.
Although most of Burnet’s 400-strong team work on its COVID-19 response, in August it announced a significant achievement: the sale of its 75%-owned subsidiary 360biolabs to a United States acquirer for $400 million.
The lucrative sale was remarkable. The sheer amount of profit also creates an interesting dilemma: is Burnet a charity or a start-up incubator? The embarrassment of riches means that Burnet will soon face a similar dilemma to the Hillsong Church, which has for decades managed a delicate balance between highly profitable private enterprises and an ostensible (and of course tax-deductible) charitable mission.
Burnet’s 2020 annual report provides some clues. It said: “Other than its holding in subsidiaries 360 Biolabs Pty Limited (75% equity) and Biopoint Hong Kong Ltd (78.75% equity) the group is a not-for-profit entity and is primarily involved in medical research and associated public activities directed at diagnosis, treatment and control of infectious diseases and cancer in humans. The institute is a registered charity with the Australian Charities and Not-For-Profit Commission which holds deductible gift recipient status and is exempt from income tax.”
Even before the announcement of the 360biolabs windfall (which remains subject to FIRB approval), Burnet had a stellar 2020. Its surplus (equivalent to its net profit) skyrocketed from $2.7 million in 2019 to $63 million in 2020 (boosted by the $55 million “sale and leaseback” of its Melbourne head office). The group’s assets rocketed from $91 million to $171 million. Even without the property sale, Burnet’s operating cashflow rose from $3.8 million to $13.4 million. This growth was far higher than the $100 billion glamour stock Atlassian.
Its magnificent financial performance, however, didn’t stop the not-for-profit from claiming JobKeeper from taxpayers. Even without that largesse, Burnet’s cashflow more than doubled (and its surplus was about 20 times higher than 2019).
If that wasn’t enough, it will now pocket upwards of $200 million from the sale of a majority-owned “for profit” subsidiary. Burnett also received a $2.7 million grant from the Victorian government in 2020 to assist with its COVID response.
Burnett has one of the bluest of blue-chip boards in Australia, led by chair (and former chair of Blake Dawson Waldron) Mary Padbury alongside luminaries such as private equity kingpin and former Macquarie Investment bank chief Robin Bishop, equity capital markets guru Michael Ziegelaar, Professor Peter Colman, Professor Christina Mitchell and well-regarded Doherty Institute head Professor Sharon Lewin.
Crikey tried to contact Burnet on four occasions to ask if it would return the JobKeeper payments but it did not respond before publication.
Adam, you don’t seem to understand what a ‘not for profit’ company (NFP) actually is. A NFP company MUST earn a profit/surplus if it is to survive and fulfill its designated role.A NFP is most often a company limited by guarantee which means it cannot distribute a dividend (because it does not have shareholders in the usual way). Instead of fixating only on the board members have a look at the extraordinary quality of its researchers and their world class achievments. Because Burnet is a financial success it does not need to prostitute itself and beg governments (Fed and State) for all its funding requirements.Would you rather have it ‘gutted’ in the same way CSIRO was treated by the right wing nut job flat Earthers some years ago? Finally, NFP companies do pay income tax and they do get audited. So the more taxable income they generate, the more tax they pay.
The main point of contention, was that they’re a bunch of infectious disease experts, in a 100 year pandemic, that clearly have enough work, and ‘surplus’ on their income statement year on year, but still found the opportunity to claim a lot of jobkeeper on top of claiming Victorian government grants. It’s pretty shameful for a “NFP” to do this, especially in a windfall year. Shareholder run companies have been demonized in the media for being more deserving of JK than Burnet.
What part of Crikey “tried to contact Burnet on four occasions to ask if it would return the JobKeeper payments but it did not respond before publication”?
Using “Crikey” to legitimise his pursuits in his own self-interest?
“Its surplus (equivalent to its net profit) skyrocketed from $2.7 million in 2019 to $63 million in 2020 (boosted by the $55 million “sale and leaseback” of its Melbourne head office)”
Oh god, don’t tell me spiv accountants are still pulling this one. It beggars belief that anyone would ever have tried it on. It made no sense back in the 90s when it became flavour of the decade, but surely twenty years later the profession has woken up to the fact that this is a farce.
Spare m. We are where we are because of accountants running the country.
It makes sense for a NFP/ACNC organisation. When you don’t have investors banging on your door wanting dividends you can concentrate on other things. The sale of the Melbourne office could be because it is no longer suitable/fit for purpose and a move to another ‘purpose built facility’ in the Parkville medical/precinct within the medium term may be on the cards. I do not have any inside knowledge on this matter but other organisations such as large sports clubs (who are income tax exempt in many cases) follow this approach : sell your existing facility to a property developer and then build a new venue elsewhere.
The surplus of a NFP is not the same as a profit from an IOF. A NFP surplus is not distributed to shareholders but has to be invested in achieving/furthering the NFPs objectives. An NFP is owned by its members, who are prohibited from receiving any personal financial benefit from the NFP. An NFP can own a for-profit entity, but any dividends or income it receives from that entity has to go to furthering the NFP objectives, not distributed to its members.
Whether the Burnet Institute is a good or a bad thing, I don’t know (at least, from this article), but I do know that an NFP is not an investor owned commercial outfit, and to ‘analyse’ it as such is, at the least, misleading.
I think the Schwabber is jealous of the institute, especially given his favourite one the IPA is reliant on the obese Rhinehart for its funds.